Shining the spotlight on Shared Ownership lending
Shared Ownership is quite a tricky one for customers to get their head around, and there are mixed reviews around Shared Ownership and if it really is as good as it sounds. So we’re shining the spotlight on Shared Ownership lending to help you support your customers in making the best decision for them.
An affordable route to home ownership
Would it surprise you if we told you that the average house price in the UK is £278,000? Probably not. But what if we told you that, according to the Rightmove House Price Index for February 2020, house prices have risen throughout the UK by over 3% on average over the past year. Even though it’s still the case that some regions are more expensive than others, there is one very strong trend. That it doesn’t matter where you live, house prices are increasing.
This is where Shared Ownership really comes into its own. The scheme offers an affordable route to home ownership in a market where affordability is becoming more of a challenge. The idea that you can buy a share in a property gives buyers short term purchasing power allowing them to get onto the housing ladder with a small deposit.
A good alternative to Help to Buy
Since the introduction of Help to Buy in 2013, the Government anticipates that it will have enabled home-ownership for over 300,000 households. However, Help to Buy is slowly withdrawing, beginning with the introduction of a new Help to Buy scheme to run from April 2021 to March 2023. This scheme is restricted to first time buyers and includes regional price caps to ensure that it is suitable for the people who need it the most.
With these changes on the horizon, now is the perfect time to be looking to Shared Ownership to ‘save the day’. Shared Ownership has been an ideal option for first time buyers, but it is also perfect for second or even third time buyers who are struggling to make the next step.
The options are increasing
Shared Ownership has come a long way since it was launched in the late 1970s. A few decades later, more than 200,000 people have become home owners under the scheme – and it doesn’t look like its stopping. In 2018 alone, Rightmove listed 2,500 homes as Shared Ownership properties and there are ongoing commitments by the Government to look into new waves of Shared Ownership developments – so don’t worry, it’s here to stay.
There’s still some rent to pay
Dependant on how much of a share your customer is in a position to buy, it is still only that – a share. This means that until the buyer is in a position to staircase to owning 100% of the property value they will still be paying a proportion of rent to the housing association/landlord. The good news is that, when the buyer has come to the end of their deal, there are lots of competitive deals and rates to make staircasing an affordable option.
The bad news is that there is always potential for future costs, and not small ones. Additional shares can be bought as and when it is affordable for the buyer, but depending on the size of the share, they aren’t cheap and some customers may want to staircase as quickly as possible.
The Cambridge offering human-made mortgage decisions
Whether your client is remortgaging, a first time buyer or they are looking to upgrade and buy a new home, The Cambridge can help.
With the aim to make home ownership an affordable option for all types of buyers, we are always looking for new ways to improve our lending proposition. For Shared Ownership, not only have we reduced the minimum loan size for purchase and remortgage from £50,000 to £20,000 to help support a larger variety of house prices, we’ve removed the upfront £199 application fee on the entire Shared Ownership range reducing upfront costs. And for those looking to remortgage, we have introduced a 95% LTV remortgage option to our range, allowing borrowers to staircase faster and own a larger percentage of their property.
Our current service levels
Target 2 days
App received to reviewed
Target 3 days